Malta · Accounting records, annual accounts, reports and distributions

Keep the accounting records and prepare the annual accounts

the Companies Act, Chapter 386 · articles 163, 164 and 165, articles 167 and 168 with Third Schedule, Part I, articles 170 to 175 with Third Schedule, Part II, articles 176, 179, 179B and 180, articles 185 and 187, and article 186 with the Eighth Schedule

The accounting records rule is where most enforcement starts, because it is objective. The records must be proper within the meaning of article 163(2), they must be kept at the registered office or at the place article 163(3) permits, and a parent company has the further duty in article 163(4).

The second trap is consolidation. If at the end of an accounting period a company is a parent company, the directors must prepare consolidated accounts under article 170(1) unless an exemption applies, and every exemption in article 174 is conditional on the matters that provision names. The related party and shareholding disclosures in article 175 apply to both the individual and the consolidated accounts.

In lieu of the requirements of articles 13 to 18 of the Commercial Code, a company must keep the accounting records described in article 163(1), which are proper only if they satisfy article 163(2). The records must be kept at the registered office or at the other place permitted by article 163(3), a parent company is subject to article 163(4), and the retention period is set by article 163(5). The directors of a parent company must secure the position described in article 164(5). A notice under article 165 must state whether the current or previous accounting reference period is affected (article 165(4)).

The directors of every company must prepare individual accounts for each accounting period under article 167(1), drawn up clearly in accordance with generally accepted accounting principles under article 167(2). The individual accounts must give a true and fair view of the undertaking's assets, liabilities, financial position and profit or loss (article 167(3)), and where in exceptional cases the application of a provision is inconsistent with that duty, article 167(5) applies. Banks and financial institutions follow the Banking Rules under article 168(2), and insurance and reinsurance undertakings the Insurance Rules under article 168(3).

Intangible assets must be written off over their useful economic life under Third Schedule, Part I, paragraph 2(1), and an asset or liability relating to more than one layout item is dealt with under paragraph 2(2). Public-interest entities and large undertakings must give the note disclosures in Third Schedule, Part I, paragraph 3, medium-sized and large undertakings those in paragraph 4, and large undertakings and public-interest entities those in paragraph 5.

If at the end of an accounting period a company is a parent company, the directors must prepare consolidated accounts under article 170(1). Consolidated accounts comprise the statements listed in article 171(1), are prepared subject to article 171(2), must give a true and fair view under article 171(3), and article 171(5) applies in exceptional cases. The directors act within the competences assigned to them by article 172. The exemption in article 174(1) is conditional on the matters in article 174(2). The notes to the individual accounts must give the information in article 175(1) and the notes to the consolidated accounts that in article 175(2). Third Schedule, Part II, paragraphs 1 to 4 set the consolidation and note requirements.

A company's annual accounts must be approved by the board of directors and signed as article 176(1) requires, every copy laid before the company in general meeting must comply with article 176(2), and the copy delivered to the Registrar with article 176(3). The auditors' report is subject to article 179(5) and (6), and the audit report of public-interest entities to article 179B(1) and (2). A copy of the annual accounts must, not less than fourteen days before the date of the meeting at which they are to be laid, be sent to the persons named in article 180(1), subject to article 180(2); if copies are sent less than fourteen days before the meeting, article 180(3) applies. Any member and any debenture holder has the right in article 180(5).

The balance sheet total is calculated as article 185(4) provides, aggregate figures are ascertained under article 185(7), figures for each subsidiary undertaking under article 185(8), net turnover is defined by article 185(9) and the average number of employees is determined under article 185(10). A company must present its annual accounts in the currency required by article 187(1), and where they are presented in another currency article 187(2) applies; thresholds are applied under article 187(3) and publication is governed by article 187(4). A change of currency requires the delivery in article 186(4), an investment company with variable share capital may change currency only as article 186(6) allows, and the conversion itself follows Eighth Schedule, paragraphs 2 to 6.

Working files 30, 31, 33, 34, 38 and 39 of the MT-COMPANY agent toolkit build the accounts from the records upward. Working file 30 asks where the accounting records are kept, how long they are retained and whether the parent-company duty in article 163(4) applies. Working file 31 walks the individual accounts and the Third Schedule note disclosures by size of undertaking. Working file 33 tests whether you are a parent company at the period end, whether any exemption in article 174 is available and whether its conditions are met. Working file 34 asks for the date of board approval, the date the copies were sent to members and the date of the meeting, then applies the fourteen-day rule in article 180(1). Working files 38 and 39 apply the size criteria in article 185 and, where the currency has changed, the Eighth Schedule conversion.

• Working file 30 · Accounting records: what must be kept, where, and for how long
• Working file 31 · Individual accounts: preparation, true and fair view and the notes
• Working file 33 · Consolidated accounts and the parent company
• Working file 34 · Approval and signature of the annual accounts, the auditors' report and circulation to members
• Working file 38 · Size criteria for undertakings and the currency in which accounts are presented
• Working file 39 · Changing the currency of the share capital and converting the accounts

ComplianceSME tracks the Companies Act, Chapter 386, and updates the toolkit on your account through the Compliance Complete account, so that you are never working from a superseded version. Compliance Complete

• Prepare the directors' report, lay the accounts and file the annual return
• Pay a dividend or make any other distribution lawfully
• Report payments to governments or publish the report on income tax information

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